Technology transfer to developing countries: a quantitative approach

Abstract

Technology transfer is extensively believed to be one of the major debates in the literature on
development economics. The experiences of some successful countries in rapid economic and
industrial development, in particular, some East-Asian Newly Industrialised Countries (NICs)
show that the acquisition of a significant amount of foreign technology has played a crucial role.
This crucial role includes promoting their managerial and technical expertise as well as
increasing their productivity level through the adoption of a set of appropriate policies and
strategiesT. hesee xperiencesc ould have valuable lessonsf or other countriesw ho wish to follow
similar strategies to achieve rapid industrialisation and technological development.
Although many Less Developed Countries (LDCs) have realised the great importance of
technological transformation for their rapid economic and industrial development, they have not
designed effective and efficient policies for the transfer of appropriate and high-level
technologies.
The present empirical investigation is intended to contribute to the large existing literature on
technological transfer and the role that Multinational Corporations (MNCs) play in this. Its
major contribution lies in demonstrating rigorously that the integration of foreign technologies is
greatly affected by the socio-economic conditions of the recipient countries.
The present study attempts to identify the main socio-economic characteristics of countries
involved in assimilating transferred technology. It first identifies the critical success or failure
factors for effective technology transfer and the rapid industrialisation of the LDCs in general.
Then, it provides a quantifiable metric index of the rate of the technological absorption.
Selectiono f relevant variablesa nd choosingt he sampleo f countries are summarisedT. he model,
which is based on the multiple regression analysis as well as other statistical techniques, is
identified.
The four-variable-model derived from the stepwise regression results gave a statistically
significant R-sq = 70.71% and R-sq (adj) = 66.7% and satisfies the principle of parsimony, was
chosen as the preferred model. This has as explanatory variables transport and communications
and gross national savings as economic indicators - Christian religion and natural disasters (negative concept) as social indicators. The results suggest that countries with the above
indicators are more able to absorb and integrate foreign technologies. In general, the results
reveal that the rate of technology integration varies greatly with the level of socio-economic
development.
Some intangible factors that cannot as yet be quantified and may be expected to have significant
effects on the rate of technological integration, such as political and managerial factors are
discussed.
The analysis of results is concludedw ith somer ecommendationsa nd suggestionsd erived from
the research findings and results for the effective and successful technology transfer of LDCs
along with the technology transfer in Africa, problems of AIDS and its impact on African
development.